Indonesians clamoring for new Hollywood movies must head overseas

As Hollywood rolls out its biggest movies for the summer, film fans in Indonesia are so frustrated they're booking flights to neighboring countries to catch the newest blockbusters.

Indonesia has plenty of cinema screens – more than 600 nationwide. But a bitter dispute about import taxes on Hollywood films has led to a drought of new titles. Theaters have seen a sharp drop in ticket sales as moviegoers take a pass on second-run, local, and independent films. Indonesia’s box office is down by around 60 percent since February, when US studios suspended distribution, according to an industry association.

For Rusli "Sly" Eddy, a film buff in Jakarta, watching a pirated DVD or download isn’t a substitute for a big-screen experience. So he visits cinemas when he’s on overseas business trips and spends weekends in Singapore, about a 90-minute flight away. To make the most of these visits, he and other film fans squeeze in three or more movies a day, loading up on the newest imports.

“Obviously it’s devastating, especially during the summer season. You want to see your favorite blockbusters on the big screen and we can’t do it here,” says Mr. Eddy, who runs an annual fantasy film festival in Jakarta.

Golden Village, a theater chain in Singapore, has introduced a promotional offer specifically for visiting Indonesians, with a free pass for every eight films seen. Moviegoers must show their passport and boarding pass to qualify for the offer.

Indonesians are also traveling to Malaysia and Thailand to watch films, says Eddy. But many more are resorting to pirated DVDs, which are sold freely in Indonesia for a few dollars, often before they show up in theaters.

Room for movie-going hope?

A glimmer of hope for movie fans emerged earlier this week when Indonesia’s Ministry of Finance said it would revise import duty on foreign films in response to complaints from distributors. Hollywood studios have objected to a royalty-based tax on films, arguing that it was unfair and at odds with international practice. The revised tariff is based on the length of the imported film.

Culture and Tourism Minister Jero Wacik said that taxes would rise, though modestly. “There had been a steep rise, so there was some tumult as importers objected. Even the president had to intervene,” he said, according to the Jakarta Globe.

Still, distributors will face hefty demands for back taxes that could frustrate any quick return to business as usual. Two dominant Indonesian importers of Hollywood films are contesting claims by the US for over $40 million in unpaid taxes between 2008 and 2010, based on the old rules.

Revising the tax duty is only the first step to ending the drought, says Ananda Siregar, CEO of Blitz Megaplex, the second-largest theater operator. The next step is for US studios to begin exporting new movies to Indonesia, but this will be difficult as long as the importers are still battling the taxman.

“I’m afraid moviegoers will be disappointed and waiting in vain if the major studios still insist on exporting through their current distributor. As far as I know, their distributor’s import licenses are still suspended pending full payment of their back taxes,” he wrote in an e-mail.

The upside of the blockbuster movie drought

Indonesian government officials have tried to put a nationalist spin on the tax dispute, arguing that fewer US blockbusters means more opportunities for domestic films. Last year, cinemas showed 77 domestic movies, compared with 192 foreign titles. The number of Indonesian films produced annually has risen in recent years.

One beneficiary of the current Hollywood drought is “Hearts of Freedom,” a big-budget film about Indonesia’s war of independence from Dutch colonialism that premiered on multiple screens last week. But some film producers are skeptical about the government’s claims, pointing to its lack of consistent support for the industry.

“I think if the government is very serious in promoting Indonesian films, it needs to understand the big picture, first of what the market needs,” says Shanty Harmayn, a Jakarta-based producer. She argues that Indonesia needs more screens and sustained investment in film education and other infrastructure in order for producers to meet the demand for higher quality movies.

Eddy says that he enjoys Indonesian films, but doesn’t want to miss out on what the rest of world is watching. This includes "Transformers: Dark of the Moon" and "The Green Lantern," which are on his must-see list for the summer, even if it means leaving town on the weekend. “I want to see it on the big screen with a cool sound system,” he says.